WELLINGTON, Feb 2 (Reuters) - New Zealand wage growth slowed
from record levels in the fourth quarter as the recession started
to hit hard, backing the case for more interest rate cuts.
The labour cost index (LCI) of private wages rose 0.7 percent on the previous quarter, for an annual rise of 3.2 percent. A Reuters poll had forecast a quarterly rise of 0.8 percent.
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KEY POINTS:
- Private sector LCI driven by higher wages in health, community group and local government sectors.
- Q4 quarterly employment survey (QES) private average hourly earnings rose 0.8 percent on previous quarter.
- Filled jobs up 0.4 percent pointing to growing weakness in jobs market.
- Click on for brief LCI table
- Click on for brief QES table
COMMENTARY:
CRAIG EBERT, SENIOR MARKETS ECONOMIST, BNZ
'It's all softening off at least as much as we expected. It will take some time for the wages deceleration to come given that it always takes time.
The employment and activity indicators were a touch weaker, but none of it is a complete surprise although it's a touch weaker than might be expected so early in a labour market that has always taken time to adjust. But the adjustments certainly seem to be coming through.'
KHOON GOH, SENIOR ECONOMIST, ANZ-NATIONAL
'The main focal point is the employment activity indicators from the QES and they were unequivocally weak. A sharp drop in paid hours but more importantly the seasonally adjusted filled jobs showed a 1.1 percent decline in the quarter.
It suggests we're set for a very weak household labour force print this Thursday, and that'll keep the rates market looking for more aggressive easing from the RBNZ (Reserve Bank of New Zealand).'
ROBIN CLEMENTS, SENIOR ECONOMIST, UBS
'It looks like there's been some moderation in the labour cost index. We weren't expecting low wages, but it's heading in the right direction.
The filled jobs were up, that may come as a bit of a surprise and it may suggest there's no disaster lurking in the household labour force survey later this week. Hours were cutback, which is obviously the first option for employers.
'This isn't horrible data, it's just weak.'
MARKET REACTION:
- The New Zealand dollar nudged up to around $0.5080/90. The yield on the March bank bill contract was unchanged at 3.1 percent, compared with the 3.5 official cash rate.
LINKS:
- The full data is available at the Statistics New Zealand Web site: www.statistics.govt.nz
- For all New Zealand news and data, 3000 Xtra users can click on
BACKGROUND:
- The LCI and QES provide only partial measures of the labour market. The LCI measures labour costs for a fixed quantity of labour input. The QES measures average earnings and reflects changes in the make up of the workforce.
- The Reserve Bank of New Zealand cut interest rates by 150 basis points to a record low 3.5 percent last Thursday and said more cuts were possible to combat the global credit crisis and an economy in its first recession in a decade.
- All 14 economists surveyed by Reuters expect the central bank to cut rates again by at least 50 basis points at the next review on March 12.
- The RBNZ, which previously has voiced concern about the inflation threat from the growth in wages, made no mention in last week's statement.
- Fourth quarter household labour force survey due on Feb. 5 at 10:45 a.m. (2245 GMT Wednesday) will give latest official measure of jobs.
- Unemployment rate is expected to jump to 4.7 percent from Q3's 4.2 percent, with expectation that around 14,000 jobs will be lost during the quarter, according to a Reuters poll.
- The NZ Institute of Economic Research's fourth quarter survey showed a net 32 percent of respondents expecting to cut staff over the next three months, the highest in more than 17 years. Keywords: NEWZEALAND ECONOMY/WAGES (Wellington newsroom +64 4 471 4234, fax +64 4 4736 212, wellington.newsroom@reuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The labour cost index (LCI) of private wages rose 0.7 percent on the previous quarter, for an annual rise of 3.2 percent. A Reuters poll had forecast a quarterly rise of 0.8 percent.
****************************************************************
KEY POINTS:
- Private sector LCI driven by higher wages in health, community group and local government sectors.
- Q4 quarterly employment survey (QES) private average hourly earnings rose 0.8 percent on previous quarter.
- Filled jobs up 0.4 percent pointing to growing weakness in jobs market.
- Click on for brief LCI table
- Click on for brief QES table
COMMENTARY:
CRAIG EBERT, SENIOR MARKETS ECONOMIST, BNZ
'It's all softening off at least as much as we expected. It will take some time for the wages deceleration to come given that it always takes time.
The employment and activity indicators were a touch weaker, but none of it is a complete surprise although it's a touch weaker than might be expected so early in a labour market that has always taken time to adjust. But the adjustments certainly seem to be coming through.'
KHOON GOH, SENIOR ECONOMIST, ANZ-NATIONAL
'The main focal point is the employment activity indicators from the QES and they were unequivocally weak. A sharp drop in paid hours but more importantly the seasonally adjusted filled jobs showed a 1.1 percent decline in the quarter.
It suggests we're set for a very weak household labour force print this Thursday, and that'll keep the rates market looking for more aggressive easing from the RBNZ (Reserve Bank of New Zealand).'
ROBIN CLEMENTS, SENIOR ECONOMIST, UBS
'It looks like there's been some moderation in the labour cost index. We weren't expecting low wages, but it's heading in the right direction.
The filled jobs were up, that may come as a bit of a surprise and it may suggest there's no disaster lurking in the household labour force survey later this week. Hours were cutback, which is obviously the first option for employers.
'This isn't horrible data, it's just weak.'
MARKET REACTION:
- The New Zealand dollar nudged up to around $0.5080/90. The yield on the March bank bill contract was unchanged at 3.1 percent, compared with the 3.5 official cash rate.
LINKS:
- The full data is available at the Statistics New Zealand Web site: www.statistics.govt.nz
- For all New Zealand news and data, 3000 Xtra users can click on
BACKGROUND:
- The LCI and QES provide only partial measures of the labour market. The LCI measures labour costs for a fixed quantity of labour input. The QES measures average earnings and reflects changes in the make up of the workforce.
- The Reserve Bank of New Zealand cut interest rates by 150 basis points to a record low 3.5 percent last Thursday and said more cuts were possible to combat the global credit crisis and an economy in its first recession in a decade.
- All 14 economists surveyed by Reuters expect the central bank to cut rates again by at least 50 basis points at the next review on March 12.
- The RBNZ, which previously has voiced concern about the inflation threat from the growth in wages, made no mention in last week's statement.
- Fourth quarter household labour force survey due on Feb. 5 at 10:45 a.m. (2245 GMT Wednesday) will give latest official measure of jobs.
- Unemployment rate is expected to jump to 4.7 percent from Q3's 4.2 percent, with expectation that around 14,000 jobs will be lost during the quarter, according to a Reuters poll.
- The NZ Institute of Economic Research's fourth quarter survey showed a net 32 percent of respondents expecting to cut staff over the next three months, the highest in more than 17 years. Keywords: NEWZEALAND ECONOMY/WAGES (Wellington newsroom +64 4 471 4234, fax +64 4 4736 212, wellington.newsroom@reuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.